Abstract
United States State Highway Agencies (SHAs) use Incentive/Disincentives (I/D) to minimize negative impacts of construction on the traveling public through construction acceleration. Current I/D practices have the following short-comings: not standardized, over- or under-compensate contractors, lack of auditability result in disincentives that leave SHAs vulnerable to contractor claims and litigation and are based on agency costs/savings rather than contractor acceleration. Presented within this paper is an eleven-step I/D valuation process. The processes incorporate a US-nationwide RUC and agency cost calculation program, CA4PRS and a time-cost tradeoff I/D process. The incentive calculation used is the summation of the contractor acceleration and a reasonable contractor bonus (based on shared agency savings) with an optional reduction of contractor’s own saving from schedule compression (acceleration). The process has a capability to be used both within the US and internationally with minor modifications, relies on historical costs, is simple and is auditable and repeatable. As such, it is a practical tool for optimizing I/D amounts and bridges the gap in existing literature both by its industry applicability, integrating the solution into existing SHA practices and its foundation of contractor acceleration costs.
Highlights
As a motorist, seeing the “orange barrels” of a construction project is an awful sight
14% used a combination of the road user costs (RUCs), state highway agencies (SHAs) and contractor costs as is recommended within literature
While the researchers feel this is an apt representation of SHA practices, it is not statistically representative of the entire population, all executed projects in the United States’ (US))
Summary
As a motorist, seeing the “orange barrels” of a construction project is an awful sight. All highway work zones come with a cost to the public through travel delays, vehicle operating costs, crash costs, emissions costs, and/or impacts to nearby projects [1] To reduce these road user costs (RUCs), increasing both the efficiency and sustainability of the United States’ (US) infrastructure, the US Federal Highway Administration (FHWA) has encouraged US state highway agencies (SHAs) to implement Incentive/Disincentive (I/D) contracting provisions for early project completion. US federal guidelines to determine I/D exist [2], guidance is vague and relies on project engineering judgement versus an all-encompassing, calculation-based I/D price optimization process These guidelines typically result in SHA I/D valuation practices that are based only the RUC or agency costs and are often ad-hoc versus systematic [3,4]. This can open SHAs to litigation from contractors as common law states disincentives can only be true incurred costs, difficult to prove without detailed backup [5]
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